Summary
- Boeing is acquiring Spirit AeroSystems in an all-stock agreement being priced at $4.7 billion.
- However, Boeing will also assume Spirit AeroSystems’ net debt, which will balloon the price of the transaction to $8.3 billion.
- In a separate agreement, Spirit AeroSystems will compensate Airbus $559 million as the European plane maker takes over the sites where its aircraft parts are being made.
Boeing and Spirit AeroSystems have entered into a definitive agreement for the former to purchase the latter in an all-stock transaction, which would value the major Boeing supplier at $37.25 per share. At the same time, Airbus and Spirit AeroSystems entered into a separate agreement for the latter to divest its Airbus-related sites.
Best interest of the flying public, airlines, and employees
According to Boeing’s statement announcing the transaction on July 1, each Spirit AeroSystems shareholder will receive between 0.18 and 0.25 of Boeing’s shares for their one stock in the supplier, with the ratio depending on the price of the aircraft manufacturer’s shares.
The ratio would be calculated by dividing $37.25 by the volume-weighted average share price of Boeing over a 15-day period on the second trading day prior to the closing of the transaction, whereupon a share price of $149 would be the floor (ratio of 0.25), while the ceiling would be $206.94 (ratio of 0.18) per share.
Photo: Ryan Fletcher | Shutterstock
At the time of writing, Boeing’s shares closed at $182.01 on June 28, dropping to $179.99 during pre-market trading on July 1. Similarly, on the same day, Spirit AeroSystem stock’s closing price was $32.85, rising to $34.60 during pre-market hours. The total transaction will be priced at $4.7 billion, with Boeing also acquiring Spirit AeroSystems’ net debt, valuing the deal at $8.3 billion. The aircraft manufacturer itself had a consolidated debt of $47.9 billion at the end of Q1 2024, down from $52.3 billion in Q4 2023.
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David Calhoun, the outgoing President and chief executive officer (CEO) of Boeing, stated that the deal for Boeing to re-acquire Spirit AeroSystems served the interests of the flying public, airlines, and both companies’ employees, as well as shareholders and the United States more broadly.
“By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes – centered on safety and quality.”
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Early discussions in March
While reports indicated that Boeing was looking to acquire Spirit AeroSystems for some time, the two companies confirmed that they had begun preliminary discussions about a potential transaction on March 1. At the time, the manufacturer’s statement read that with both companies collaborating on strengthening the quality of commercial aircraft that the two aerospace manufacturers are building, the collaboration had resulted in “preliminary discussions” about Boeing purchasing Spirit AeroSystems.
“We believe that the reintegration of Boeing and Spirit AeroSystems’ manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees, and shareholders.”
Photo: Ian Dewar Photography | Shutterstock
The latter’s statement emphasized that while no assurances could be given that the two companies would sign a final agreement, its board of directors and management were committed to enhancing shareholder value and were regularly reviewing opportunities to further this objective.
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On July 1, Airbus issued its own statement, which announced that the European plane maker and Spirit AeroSystems, which is also a major supplier for Airbus, has entered into a binding term sheet agreement with the supplier. The agreement covered major activities related to Airbus and its aircraft programs, including the production of the A350 fuselage sections in North Carolina and France, the manufacturing of the wings and mid-fuselage of the A220 in Northern Ireland and Morocco, and A220 pylons in Kansas.
“With this agreement, Airbus aims to ensure stability of supply for its commercial aircraft programmes through a more sustainable way forward, both operationally and financially, for the various Airbus work packages that Spirit AeroSystems is responsible for today.”
Airbus highlighted that the deal would cover the acquisition of these activities, with the European aircraft manufacturer being compensated $559 million by Spirit AeroSystems for a nominal consideration of $1. The final transaction was subject to adjustments, including the final transaction perimeter.
Photo: Airbus
In addition, Airbus stated that there was no definitive agreement between the two since a transaction remained subject to an ensuing due diligence process. At the same time, the company said that all parties involved in the transaction are willing and interested in working in good faith to advance the process.
Meanwhile, Boeing’s announcement read that while the agreement between Airbus and Spirit AeroSystems was also subject to regulatory approvals, the transaction was expected to close in mid-2025. Furthermore, Spirit AeroSystems was planning to sell its sites in Northern Ireland (unrelated to any work with Airbus), Scotland, and Malaysia.
Photo: Vytautas Kielaitis | Shutterstock
According to the supplier’s site, in addition to providing certain parts to Airbus and Boeing, Spirit AeroSystems also supplied fuselage and other parts to Bombardier’s commercial aircraft, namely its Challenger 350, Challenger 650, Global 5500 and 6500, and Global 7500 private jets.
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Divesting Spirit AeroSystems
Boeing’s move to reacquire Spirit AeroSystems came after the company’s safety and quality processes have been scrutinized more intensely once again following the Alaska Airlines Boeing flight AS1282 mid-air door plug blowout on a Boeing 737 MAX 9 in January, which resulted in a several week grounding of the type.
In a recent media briefing, Elizabeth Lund, the senior vice president of quality of Boeing Commercial Airplanes (BCA), detailed how the company has reacted to the incident and the changes implemented at its Renton, Washington, US facility. The Federal Aviation Administration (FAA) had also audited Boeing, and it was planning to continue its detailed oversight of the manufacturer in the foreseeable future.
Photo: Ingrid Barrentine | Alaska Airlines
Boeing decided to sell the Wichita, Kansas, as well as two Oklahoma sites, in February 2005. At the time, the manufacturer said that the agreement included $900 million in cash, as well as the transfer of certain liabilities and long-term supply agreements that would provide Boeing with ongoing cost savings. The transaction closed in June 2005.
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